The latest MFIC White Book recorded considerable progress in many aspects of reforms. Now that a new window of opportunity for EU enlargement is opening up, all stakeholders must invest their energy in further improving the business climate – encompassing everything from the rule of law to neglected areas of the labour market and employment, real estate development and taxation
Political instability negatively affects the economic and social environment, says Montenegrin Foreign Investors’ Council (MFIC) President Christoph Schoen. That’s why investors seek politically stable environments and predictable conditions for doing business. The route to achieving this scenario leads through joint work and constructive dialogue among the government and relevant actors in society. The latest MFIC White Book’s Ease of Doing Business Index suggests that considerable progress has been achieved on this path since the previous edition was published.
According to the latest MFIC White Book, the Ease of Doing Business Index improved considerably in 2021. What contributed the most to these results?
– The MFIC Index for 2021 was 7, which is the highest since it was launched in 2011 (on a scale from 1 to 10, with 1 representing the worst rating and 10 the best). The result achieved in 2021 shows significant growth compared to 2020, when the index stood at 6.4. It is interesting that the 2021 Index is 0.1 points higher than the 2019 Index, which was considered the best year with regard to many segments. The Index increase of 0.6 is the highest annual increase to date and represents the optimistic perception of foreign investors who arrived after the year 2020 – the year marked by the Covid-19 pandemic and its major negative impact on the country’s economy.
In contrast to previous years, 2021 saw an increase in all individual industrial indices, which is understandable given the high total increase of the MFIC Index. The biggest index result, of 7.7, was recorded in telecommunications and ICT. The tourism and trade industries recorded the highest increase, by 0.8 points, followed by the transportation/logistics industry’s increase of 0.6 points, the banking/ finance sector’s increase of 0.4 points and the 0.3 points increase of manufacturing/ energy.
What are the essential preconditions to sustain these results in today’s very complex economic situation?
– In order to improve the business environment in Montenegro, it is particularly important to conduct an active dialogue with the Government in the direction of understanding the needs of the economy, especially in the context of policy changes. Companies plan their operations over the long run, so any policy change must be timely if it is to respect the principles of predictability and the good practice of public-private dialogue.
Only agreement to a state-level economic strategy leads to a win-win situation for all stakeholders and society as a whole
According to the findings of the White Book, the rule of law, business environment predictability and discipline in the systematic and strict collection of taxes are of outmost importance to ensuring fair working conditions.
Along with changes in the global context, Montenegro has also been undergoing its own political changes. Were you in a position to participate actively and contribute to the economic reform process?
– MFIC is an active member of the Competitiveness Council of Montenegro, as the main advisory body in the field of improving the business environment. During the previous period, we focused on the implementing of our members’ recommendations, while our committees closely monitored changes to the regulatory framework governing their sectors and proposed improvement initiatives in areas of importance to the businesses of our member companies.
Implementing economic and regulatory reforms is only the first step in that direction, while the geopolitical situation creates a window of opportunity for Montenegro to accelerate its progress towards EU accession.
The second step, which is equally important for the foreign investor community, is to strengthen relevant institutions to properly enforce regulations and monitor the legal framework, and to provide a predictable and reliable environment for foreign investment.
Foreign investors strongly supported the Montenegrin economy’s recovery during the Covid-19 pandemic by investing continuously, particularly in the tourism sector. Would you expect this trend to survive the new threats facing the tourism sector?
– The pandemic did not disrupt our plans and our member companies continued to invest in Montenegro, and with the realisation of those planned investments – as already announced – investments will have amounted to 1.5 billion euros in the 2020-2022 period. These are planned long-term investments aimed at completing projects that have already started and improving existing business processes. According to the investment plans of our member companies, the largest investments were expected in the tourism sectors and total approximately 640 million euros.
Montenegro is among the world’s 20 countries that are most dependent on tourism. This sector accounts for a quarter of Montenegro’s GDP and employs around a third of the country’s workforce. We do expect the tourism sector to remain the main engine of growth in the future.
The Ease of Doing Business Index increase of 0.6 is the highest annual increase to date and represents the optimistic perception of foreign investors who arrived after the year 2020 – the year marked by the Covid-19 pandemic and its major negative impact on the country’s economy
When it comes to the upcoming tourist season, we have to find alternatives to the Russian and Ukrainian markets, which can be done by focusing on Central and Western European markets. Our marketing and promotional activities thus need to intensify to attract tourists from those countries. There is also the Government’s message that the tourism sector can count on strong state support and that the Credit Guarantee Fund will support the tourism sector financially.
The crises management of the Government and the CBCG during the previous period was highly professional, effective and strong enough to support the recovery. What do you expect from them now?
– Close and constant communication with the Government and public administration remains an important task of MFIC in helping its members develop and improve their businesses in Montenegro and supporting the transformation of the entire Montenegrin economy into a modern, diverse and competitive foreign investment destination.
Generally speaking, we look forward to cooperating with the new Government and continuing our open and constructive dialogue. We expect a continuation of the reforms that have been launched, all in the best interest of the economic growth and development of Montenegro, and ultimately of all citizens and the economy.
You are quoted as saying that “every crisis also has opportunities”. What do you see as the window of opportunity for Montenegro and MFIC member companies?
– The further development of the Montenegrin economy and society implies digitalisation, as a development and transformation policy, and we expect digital transformation to be one of the key policies of the Government in the period ahead.
Successful digital transformation represents a great opportunity for the economy, as demonstrated by the examples of other small countries and the countries of the region.
Montenegrin Foreign Investors’ Council will be a partner to the new Government in all these activities.
We expect a continuation of the reforms that have been launched, all in the best interest of the economic growth and development of Montenegro, and ultimately of all citizens and the economy
Montenegro is among the world’s 20 countries that are most dependent on tourism… and we do expect the tourism sector to remain the main engine of growth in the future
The pandemic did not disrupt the plans of MFIC member companies, which continued to invest in Montenegro and will have invested a total of 1.5 billion euros in the 2020-2022 period